Chinese power companies turn to global market
China's four largest power groups will buy coal on the international market after failing to reach a consensus with domestic coal producers. Each year China's coal producers and power companies negotiate the coming year's coal prices. This year, the country's five biggest power-generating companies had sought a 50-yuan per ton price cut from 2008 prices, while coal companies wanted to increase term prices by 4 percent in order to pass on costs from higher taxes and other rising costs.
China's five biggest power generators posted losses of RMB 30 billion in 2008. Electricity prices are fixed by the government. The international market price for coal is currently 20 percent lower than domestic price, providing a good opportunity for Chinese power enterprises to cut costs. The largest largest power generators are now contacting coal miners in Australia and Indonesia to organize an international coal conference after the Chinese new year.
Yanzhou Coal Mining Co. (600188,SH; 1171,HK), a unit of China's fourth-biggest producer of the fuel, declined 5.77 percent on its Hong Kong trading.
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